homework10.docx - 2 a Annual rent Housekeeping service...

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2. a. Annual rent $48,000 Housekeeping service 5,200 Renter’s insurance 2,000 Total apartment expense $55,200 Percentage of square footage used as office .15 Expenses allocated to office $8,280 Rhea’s home office deduction is $8,280. b. Rhea’s home office deduction is limited to $4,000 (net profit before the deduction). 4. a. BDF’s 2016 payroll tax = $60,000 × 7.65% = $4,590 b. BDF’s 2016 payroll tax = ([$118,500 × 6.2%] + [$200,000 × 1.45%]) = $10,247 9. a. Only the $120,000 profit from operations is subject to self-employment tax. b. Self-employment tax = $16,955 = $120,000 * 92.35% * 15.3% c. Net profit from operations $120,000 Ordinary gain on asset sale 17,000 Interest income on working capital 960 Before-tax income from bookstore activities $137,960 Deductible portion of self-employment tax* (8,478) ---- 50% * $16,955 Taxable income from bookstore activity $129,482 13. FGH Partnership’s $600,000 ordinary business income is allocated equally to Triad LLC and Beta. However, since these two partners are both passthrough entities, the $300,000 allocated to each is passed through and reported by the following taxpayers.
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  • Fall '16
  • Ryan

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